Lawrence Nga, The Motley Fool
5 min read
In This Article:
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E-commerce revenue growth accelerated in recent quarters.
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Artificial intelligence-related revenue grew by triple digits.
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Investors enjoyed $16.5 billion in buybacks and dividends.
Alibaba Group (NYSE: BABA) has been on a journey of transformation over the past two years as it prepares for the next growth phase. In this process, the Chinese e-commerce giant almost completely reshuffled its senior leadership team (including its CEO), doubled down on core businesses, and paid more attention to delivering shareholder value.
While its turnaround work is ongoing, there are early indicators that this effort has begun to deliver positive outcomes. Let's dive in and take a closer look.
Once the undisputed leader in the Chinese e-commerce industry, Alibaba seems to have lost its way in the last few years as younger peers like Pinduoduo and Douyin gradually expanded their market share at the expense of the incumbent.
But since Eddie Wu took over as Alibaba's CEO, he has brought new focus to the company by doubling down on core aspects of the business -- customer delight and artificial intelligence (AI) -- while axing unrelated companies, such as offline supermarkets. For instance, early this year, the tech conglomerate disposed of its shares in Sun Art, a brick-and-mortar supermarket, to focus on its core e-commerce platform business.
So far, these efforts have already brought positive results to the business. For example, the Chinese e-commerce business reported 12% growth in customer management revenue in the quarter ended March 31, an acceleration from the 9% growth reported in the quarter ended Dec. 31, 2024. Comparatively, the customer management revenue growth rate was just 4% in the fiscal year ended March 31, 2024. It is also worth mentioning that 88VIP, the highest-spending customer group, grew by double digits year over year to more than 50 million.
Beyond its Chinese e-commerce business, Alibaba's international e-commerce business grew 22% for the latest reported quarter. This business is highly diversified in regions (Europe, Asia, and the Gulf Region) and platforms (Aliexpress, Trendyol, etc.), providing enormous growth opportunities in the coming years.
Once dubbed the rising star within Alibaba Group, Alibaba Cloud experienced a difficult period in fiscal 2024, when revenue grew at just 3% amid weak demand and competition. It didn't help that Alibaba Cloud cancelled its planned initial public offering, further impacting investor sentiment.
